Following several years of dramatic decreases, medical costs per workers’ compensation claim in Texas were reported as stable in 2007 according to the Workers’ Compensation Research Institute (WCRI). The drop in costs resulted from the enactment of a pair of major pieces of reform legislation as well as an increased effort to manage medical care by system payers.
Monitoring the Impact of Reforms in Texas: CompScope™ Benchmarks, 10th Edition reports medical costs per claim in Texas were the highest of the states studied before the passage of House Bill 2600 (2001) and House Bill 7 (2005) .
By 2007, Texas medical costs per claim were 19% less than the typical study state for claims with more than seven days of lost time. Fee schedule decreases under HB 2600 combined with increased management of medical care by payers through utilization review and other means were behind the decline. However, the increase in the 2008 medical fee schedule conversion factors to reflect increases in practice expenses since 2002 and the separate conversion factor established for surgery may result in a one-time increase of 16% to 41% in prices paid for services by nonhospital providers.
At the same time, WCRI reported medical cost containment expenses per claim continued to grow rapidly in Texas, even after medical costs began to decline. At an average of $2,818, Texas had the highest medical cost containment expenses per claim among the study states in 2007/2008, 37% higher than typical. The study noted indemnity benefits per claim rose 10% in 2007, largely due to a nearly 25% increase in the maximum benefit for statutory weekly temporary total disability. Despite this significant increase in the maximum benefit, the percentage of workers whose benefits were limited by the maximum was 17%, more than double the percentage in the typical study state.
Monitoring the Impact of Reforms in Texas: CompScope™ Benchmarks, 10th Edition reports medical costs per claim in Texas were the highest of the states studied before the passage of House Bill 2600 (2001) and House Bill 7 (2005) .
By 2007, Texas medical costs per claim were 19% less than the typical study state for claims with more than seven days of lost time. Fee schedule decreases under HB 2600 combined with increased management of medical care by payers through utilization review and other means were behind the decline. However, the increase in the 2008 medical fee schedule conversion factors to reflect increases in practice expenses since 2002 and the separate conversion factor established for surgery may result in a one-time increase of 16% to 41% in prices paid for services by nonhospital providers.
At the same time, WCRI reported medical cost containment expenses per claim continued to grow rapidly in Texas, even after medical costs began to decline. At an average of $2,818, Texas had the highest medical cost containment expenses per claim among the study states in 2007/2008, 37% higher than typical. The study noted indemnity benefits per claim rose 10% in 2007, largely due to a nearly 25% increase in the maximum benefit for statutory weekly temporary total disability. Despite this significant increase in the maximum benefit, the percentage of workers whose benefits were limited by the maximum was 17%, more than double the percentage in the typical study state.
The study also discovered from 2002 to 2006 indemnity benefits per claim decreased 9% overall, largely the result of a decrease in the duration of temporary disability. Since 2002, WCRI reports the average duration of temporary disability for injured workers in Texas dropped by more than three weeks for claims at an average of 36 months of experience, likely related to the decrease in medical utilization under HB 2600 and payer focus on managing medical care. (workersxzcompxzkit)
In addition, the study indicates Texas had faster time to first indemnity payment, lower defense attorney involvement, and lower permanent partial disability/lump-sum payments compared to the typical study state.
Defense attorney involvement was lowest in Texas, 8% compared to 24% in the typical study state for 2005 claims with more than seven days of lost time and 36 months of experience. This likely reflects some combination of the dispute resolution process, limits on attorney fees, limits on settlements, and relatively lower PPD/lump-sum payments per claim – which may impact the necessity or the willingness of defense attorneys to become involved in certain types of workers’ comp cases in Texas.
Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: [email protected] or 860-553-6604.
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